Should you rent or buy a house? Here’s what a finance expert says you should know – NBC Chicago
With mortgage rates rising, many potential buyers still eyeing high home and rental prices, and sellers weighing their options, how do you do when it’s time to buy or rent?
High house prices and tight inventories come amid inflation at its highest level in four decades, making home ownership less accessible, especially for first-time buyers.
Although the average long-term US mortgage rate fell slightly for the first time in two months this week, the slight drop comes after a rapid ascent to levels not seen in more than a decade.
After seven weeks of increases, the average rate for a 30-year mortgage fell slightly to 5.1% from 5.11% last week, mortgage buyer Freddie Mac reported Thursday. Last week’s average rate was the highest since April 2010. A year ago, the 30-year rate was 2.98%.
Freddie Mac reported that the average rate on 15-year fixed-rate mortgages, popular among home refinancers, rose to 4.4% from 4.38% last week. A year ago, it was 2.31%.
NBC 5 asked Sharon Epperson, senior personal finance correspondent for CNBC, for her advice for those wondering what they should do. Here is what she said:
Q: With interest rates rising, how are you currently advising people on the real estate market?
“Well, you know, you really have to assess whether it’s the right time for you to buy or move into a new house and get a mortgage. It might not be, but rents are also going up, so it’s really another case of looking at what your priorities are and where you are right now, you know, before you can get a mortgage, before you make the decision to keep renting or buy, you need to understand what your financial situation is going to look like in both situations. So budget for both. How much are you spending now on housing and how much will you spend on your new home if you decide to buy or rent another home? the main things you need to do, but many people don’t even know what it will cost them to live for a month. They never wrote it all down. They didn’t never looked at those numbers. It’s now te mps do it. So you know where you are. This will help you decide where you need to go next.
Q: Should potential buyers be worried about rising rates?
“If you already have a down payment for a house, if you have very little or no credit card debt, if you think you have enough savings – three to six months of savings for emergencies, because there are always an emergency with a home….then you might be willing to do this.And you might want to take advantage of the fact that rates are where they are right now and maybe they could go up. so enjoy it right now. But if you’ve said no to one or more of these things, now might not be the time for you.”
Q: What about refinancing?
“Well, you know, rates have definitely gone up. But one of the best decisions I’ve made during the pandemic was to refinance my mortgage. And I did that at a time, again, where we were seeing a lot of volatility in the markets in March 2020. And I spoke to someone who is the head of retirement research at a large financial institution about what people should be doing with their overall investments and he turned to debt.got rid of debt you need to reduce your debt and refinance.refinancing your mortgage can be a great way to do this.i was expecting him to talk about mutual funds from investment, different places to be able to put your money, whether it’s stocks or fixed income, but no, he focused on debt and I think that’s a very good thing people think about. If you are able to reduce your debt, refinance it. cer and make it a more affordable payment for you, or a payment that makes more sense for you in the long run, then I think now is the time to consider refinancing your mortgage.”